Any Increase in the Scope of Services: Broadening Medicaid Reimbursement for FQHCs

Introduction

Family Health Centers of Southwest Florida, Inc. v. Secretary, Florida Agency for Health Care Administration (11th Cir. Apr. 22, 2025) addresses a dispute over how states must adjust Medicaid reimbursement rates for Federally Qualified Health Centers (FQHCs) when they expand services. 42 U.S.C. § 1396a(bb) directs states to increase or decrease an FQHC’s per-patient payment “for any increase or decrease in the scope of such services.” Florida’s Medicaid plan, however, defined “scope” narrowly, encompassing only the addition or elimination of entire services. Family Health sued, arguing that ordinary usage of “scope” reaches more than mere new service lines—it includes extensions in range, depth, intensity and duration of existing offerings. The District Court agreed and ordered Florida to rewrite its plan. On appeal, the Eleventh Circuit affirmed, establishing that “scope of services” under § 1396a(bb)(3)(B) is not limited to adding or deleting discrete services but may include any material expansion or contraction in what an FQHC provides.

Summary of the Judgment

The Eleventh Circuit addressed the question: what counts as an “increase or decrease in the scope of such services” under 42 U.S.C. § 1396a(bb)(3)(B)?

Federal Reimbursement Framework: Medicaid pays FQHCs on a fixed per-patient basis. Section 1396a(bb) sets a multi-part formula including a baseline cost, an annual inflation adjustment, and an adjustment for changes in “scope of services.”
Florida’s Interpretation: The Florida Agency for Health Care Administration’s state plan defined a change in “scope” only as the addition or elimination of an entire service line—e.g., offering dental care for the first time. It denied Family Health’s request for a rate increase based on enhanced intensity, duration or range of existing services.
District Court Ruling: The district court held that Florida’s narrow definition conflicted with the plain meaning of “any increase . . . in the scope of such services,” and granted summary judgment for Family Health, directing the state to propose a new definition that conforms to federal law.
Eleventh Circuit Decision: Applying ordinary-meaning principles and the rule against surplusage, the Court affirmed. It held that “scope” can denote “range” or “extent,” and—especially when prefaced by the word “any”—cannot be confined to discrete new services. Florida must adopt a broader, compliant definition.

Analysis

Precedents Cited

United States v. Pate, 84 F.4th 1196 (11th Cir. 2023): Reinforces that a statute’s terms are to be given their ordinary meaning at enactment.
Niz-Chavez v. Garland, 593 U.S. 155 (2021): Confirms the textualist approach—courts start with the statute’s text, context and structure.
Young v. Grand Canyon University, Inc., 980 F.3d 814 (11th Cir. 2020): Clarifies that overlapping terms in adjacent provisions do not automatically render one surplus if they have distinct possible applications.
Scalia & Garner, Reading Law: The opinion cites this treatise for interpretive maxims such as reading words in context and applying the rule against surplusage.

Legal Reasoning

The Eleventh Circuit’s reasoning unfolded through traditional textual analysis:

Ordinary Meaning: The Court observed that dictionaries define “scope” as the “range” or “extent” of something. When Congress pairs “any” with “increase ... in the scope of such services,” it signals a broad coverage, beyond the mere addition or deletion of an entire service category.
Contextual Reading: Section 1396a(bb) distinguishes “scope” from other components (baseline costs and inflation indexing) and stands alone—unlike § 1396a(10)(G), (H), (I), which refer to “amount, duration, and scope.”
Rule Against Surplusage: Florida argued that if “scope” were broad enough to include “amount” and “duration,” those words would be redundant elsewhere in § 1396a. The Court disagreed, explaining that partial overlap is permissible—terms need only be distinct enough to avoid total redundancy.
Remand Without Definition: Although the Court invalidated Florida’s narrow definition, it refused to prescribe an exhaustive new rule for “scope.” Instead it ordered Florida to craft a new, federally compliant definition that accommodates material expansions and contractions in services.

Impact

State Medicaid Plans: States will need to review and likely broaden their FQHC reimbursement provisions to capture expansions in intensity, duration, equipment, staffing, patient complexity, and other dimensions beyond new service lines.
FQHC Funding Stability: Clinics that have expanded outreach efforts, added chronic-care protocols, invested in telehealth, or upgraded equipment may now secure higher reimbursement to match increased costs.
Future Litigation: This ruling sets a precedent for judicial scrutiny of state-defined terms in federally mandated formulas—even when states have administrative discretion—reinforcing a strict textual approach over deference to state plan language.
Administrative Guidance: CMS (the Centers for Medicare & Medicaid Services) may issue guidance or model language to help states reconcile “scope,” “amount,” and “duration” without risking surplus.

Complex Concepts Simplified

Federally Qualified Health Center (FQHC): A community-based health provider that receives federal funding to deliver primary care in underserved areas.
Medicaid State Plan: A document each state submits to CMS describing eligibility, services, reimbursement methods and administrative procedures. It must comply with federal law to receive matching funds.
Per-Patient Reimbursement Formula: Under 42 U.S.C. § 1396a(bb), an FQHC’s “prospective payment” per Medicaid patient is based on:
- Historical baseline costs (1999–2000 average),
- Annual inflation adjustments tied to the Medicare Economic Index, and
- Adjustments for “any increase or decrease in the scope of services.”
Rule Against Surplusage: A principle of statutory interpretation that avoids reading a statute so as to render any word redundant. Overlap between terms is allowed so long as each term retains some independent role.

Conclusion

The Eleventh Circuit’s ruling in Family Health Centers of Southwest Florida establishes a new precedent: under 42 U.S.C. § 1396a(bb)(3)(B), “scope of services” extends beyond the simple addition or elimination of service categories. It encompasses any material change in the range, extent or intensity of services an FQHC provides to Medicaid beneficiaries. States must revise their Medicaid plans to reflect this broader interpretation, ensuring that FQHC reimbursement rates accurately track true service expansions or contractions. This decision underscores the primacy of clear statutory text, contextual reading, and the rule against surplusage in federal‐state cooperative programs—and offers FQHCs a more precise pathway to secure funding that reflects the full scope of their evolving care offerings.